LMN Ltd decided to analyse its selling and distribution costs for products X, Y and Z in order to provide management with more effective information for cost control and to guide the salesmen’s efforts towards the sale of the products with the highest potential net profi t.

The income statement of the company for the past year is as follows:

Additional Information:

Sales offi ce expenses: Allocated in the same ratio as in packing General and administrative expenses: Allocated on the basis of sales You are required to prepare a statement showing the analysis of the selling and distribution costs for management’s guidance.

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Rs. Rs. Sales 2,60,000 Cost of goods sold 1,25,000 Gross profit on sales 1,35,000 Selling and distribution costs Salesmen's salaries 12,250 Salesmen's commission 13,750 Advertising 32,500 Transport and delivery 4,200 Credit and collection 2,050 Packing 2,800 Warehouse 2,250 Sales office expenses 7,400 Bad debts 4,705 81,905 General and administration expenses 20,625 1,02,530 Net profit 32,470